Reddit’s Initial Public Offering (IPO) is making a splash with an oversubscription rate of four to five times. This highly suggests that Reddit could hit its expected valuation of $6.5 billion. This level of investor attention is promising for Reddit’s eventual market debut and translates into clear confidence in the platform’s future growth.
Despite the strong interest so far, the actual outcome post-IPO, scheduled for March 20, 2024, is still uncertain. The IPO journey could result in shares achieving the recommended prices ranging from $31 to $34. Similarly, waning enthusiasm could temper these expectations, underscoring the unpredictable nature of share markets.
This oversubscription hype comes in spite of Reddit lowering its valuation following a $10 billion private fundraising round in 2021. Currently, the IPO aims to generate around $748 million. This estimate has certainly got investors’ attention, leaving them eager to be a part of the social media giant’s public trading.
Though Reddit has faced criticism over its niche focus and content moderation policy, its user base has seen exponential growth. Admittedly, the move to charge app developers for data access in 2023 was met with resistance. Still, Reddit stood by its decision, arguing it was necessary for financial sustainability. Balancing its financial needs with its commitment to a free and open community now poses a challenge for Reddit.
The platform is home to numerous ‘subreddits’, such as “WallStreetBets”, the famous hub of the 2021 “meme-stock” scandal. These subreddits serve as discussion forums, often having significant influence over the stock market.
To attract retail investors, Reddit is reserving 8% of its total share offering for platform users and personal connections of its directors and employees. As per reports, Reddit had around 73.1 million daily users in Q4 2023. This move signifies Reddit’s expected growth trend and its preparedness to garner more retail investors.
